Abstract

Over the last decade the British Labour Government has presided over unprecedented increases in levels of spending on the National Health Service (NHS). But Opposition parties now claim that this record growth in NHS expenditure has been misspent, and some commentators are already predicting that the next British general election will be fought over the productivity of public services. In anticipation of this, the Prime Minister Tony Blair has emphasised the urgency with which the NHS must deliver efficiency from its huge extra investment: between 2003/04 and 2007/08, NHS expenditure is planned to increase each year by more than 7 per cent in real terms from about £60bn in 2003/04 to £90bn in 2007/08. Hence, if NHS productivity is to increase, the average annual monetary value of growth in output over this period needs to exceed £6bn. In response to the Atkinson Review into government output and productivity, the NHS will increasingly be subject to a new way of measuring its productivity to assess whether the ‘increased spending on the NHS has been justified in terms of cost-weighted activity and improvements in quality of care (including gains in health). Work so far has put a monetary value of £30k on gains in health, measured in Quality-Adjusted Life Years (QALYs). Ministers, officials and managers of strategic health authorities and primary care trusts need to understand the impacts of their policies and priorities both on the health of populations and on the new way of measuring NHS productivity. But standard approaches of setting priorities require development to provide such information.